MPs have questioned a proposal in the Sacco Societies (Amendment) Bill, 2025 to cap deposit insurance compensation at KSh100,000, warning that the limit could leave members with larger savings exposed if a SACCO collapses.
Lawmakers urged SASRA to adopt a more flexible and depositor-friendly framework that strengthens oversight, protects members’ savings, supports innovation, and avoids unnecessary regulations that could burden SACCOs.
Members of the National Assembly’s Departmental Committee on Trade, Industry and Cooperatives have expressed concern over a proposal in the Sacco Societies (Amendment) Bill, 2025, to cap deposit insurance compensation at Ksh100,000 per depositor, warning that the limit could expose thousands of Kenyans to significant financial losses in the event of a Sacco collapse.
The concerns were raised on Tuesday, June 30, during a meeting with officials from the Sacco Societies Regulatory Authority (SASRA), as lawmakers scrutinised the proposed legislation aimed at strengthening the regulation of Savings and Credit Cooperative Societies (SACCOs) while enhancing the protection of members’ savings.
The committee, chaired by Ikolomani MP Bernard Shinali, supported efforts to strengthen oversight of the cooperative sector but cautioned that the proposed reforms should strike a careful balance between protecting depositors and avoiding unnecessary bureaucracy that could place an additional burden on Saccos.
Among the issues raised by lawmakers was the proposed deposit insurance scheme, which would compensate members up to a maximum of KSh100,000 in the event that a regulated Sacco collapses.
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MPs expressed concern that the proposed compensation cap would leave members with larger savings vulnerable to significant financial losses. They urged the Sacco Societies Regulatory Authority (SASRA) to consider a fairer compensation framework that considers the actual value of members’ deposits.
The legislators further observed that Saccos continue to serve as the main source of affordable credit for millions of Kenyans, particularly salaried employees, small-scale traders, and farmers, owing to their accessible lending procedures and lower borrowing costs compared to commercial banks.
They warned that any legislation affecting the sector must preserve public confidence while ensuring members’ deposits receive adequate protection.
Committee members also urged SASRA to ensure the proposed law remains responsive to the changing needs of Kenya’s cooperative movement.
Rather than embedding every operational reform in legislation, lawmakers recommended that the regulator address administrative issues through regulations where appropriate, allowing greater flexibility to adapt to emerging challenges without requiring frequent amendments to the law.
The MPs further encouraged the regulator to develop a legal framework capable of supporting innovation and technological advancement in the Sacco sector.
By Frank Mugwe
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